This is very true. My dad owns a muffler shop, and he lost money for the first several years. He very much expected this, though, and was patient. A lot of new business owners don't understand this uphill climb.

Even worse when business owners have no business sense. A local store overprices the shit out of their products from the get-go. This local frozen yogurt opened up a few months ago. $5 for 10oz of yogurt. It's in Chicago, and it's not even near the beach. Why would they charge so much? It's not a surprise they don't have any customers. They think if they are in a upper middle class area, they can charge whatever and people will buy it.

It would appear so. But after working with a large time ice cream producer, I think I could shed some light on this. It’s a slightly long post, so I apologize in advance.

Tldr: There are some compromises taken by larger ice cream corporations and certain advantages that they enjoy help them price their products lower. Problem is that the consumer does not perceive these changes to impact them too greatly so he/she does not mind the lower cost versions of “ice cream”.

First, there is a distinction between ice cream and frozen desserts. While to the consumer palate there might not be much difference, chemically and ingredient-wise, there is. Subsequently, there is a difference to the raw material costs as well.

To explain this, we also need to know, at a high level, what ice cream is made up of. It contains 3 main components: milk fats, milk solids non fats (proteins and the life) and air.

In ice cream, the fats component from a milk source. It comes from cream and milk and sometimes, in the lower quality products, from butter and butteroil. In frozen desserts, it is reasonably accurate to say that there isn't any milk. The fats come from a vegetable source, such as oils.

Why does this make a difference? Because vegetable oils have lesser seasonality compared to milk, lesser regionality (can be produced more easily than milk), do not require cold storage facilities, higher shelf life and incur lower cost.

Several, several small business ice cream outlets make actual ice cream and this hikes their costs up.

Also, using butter and butter oil comes under the tag of "modified milk ingredients". One major company that uses "modified milk ingredients" would be Nestle. One could import these ingredients from countries like New Zealand and save costs in this manner as well.

It should also be noted that large corporations have the luxury of scale that helps bring costs down. For example, they have greater volumes to either bring manufacturing in-house or bargain better with the suppliers. The small stores do not enjoy this advantage. The larger corporations would also have more evolved logistics channels that would help in reducing costs further.

Another major aspect of ice cream is the air that is beaten into it. This is called overrun in the industry parlance. Overrun is represented in percentage and represents the times by which the ice cream mix is multiplied by incorporating air. Meaning, if you have 1 L of ice cream mix and the overrun is 100%, you get 2 L of final ice cream. There are people who serve 30% overrun to people who give 100% overrun ice cream. This makes a huge difference to the raw material costs but the consumer just might not be able to make out the difference.

If you look across all the points mentioned above, they all hinge on trading cost for quality. The problem, where I am from, is that the consumers do not know the difference. Whether it is a frozen dessert or an ice cream, they can be substituted because consumers want that momentary satisfaction, and that at a lower cost (I am in a developing country).

In the United States, there is still that recognition of quality, relatively and to some extent, and people make conscious choices on the manufacturer of their choice. But there is only so much of that to be found. While small owners might lack marketing and product development skills, they strive to stay true to the food and the art will not want to compromise their product in anyway and would serve customers what is closest to “true ice cream”. And consequently, their prices are high as well.

*edit: Grammar and highlights.

*edit2: And I forgot to mention, congratulations, OP. Here's to many more years of your business!

When Yogurt Land was around at UH, it was about $.29-$.39/oz for frozen yogurt and condiments. Now I think the going rate at places in Honolulu are about $.50/oz or $.60/oz, not sure, haven't had froyo in a while. These are all self serve places.

It's about on par with most ice cream places I've been to in new England. Also, being from New England myself, the concept of ice cream being a summer only treat is absurd. You would regularly see people walking down the sidewalk mid-December downtown in my hometown chowing away on an ice cream.

Over pricing (in other words having a high markup) is a legitimate business strategy. It may reduce number of units sold but it can increase profits because many customer perceive higher value with higher priced items. Businesses don't care how many units they sell. They care about the net total profit at the end of the day. The price on the package is usually the result of low and high price testing.

How do people become so delusional with products like this? I've seen this type of thing so many times, where an absolute beast of a product is the baby of a crazy person, who cannot let it die already.

You ever spent way to much money on something you never used? You know how you try to convince yourself you're not wasting your time and that you're actually enjoying using it or that you got your money's worth? I think it's a greater version of that. They had a small idea and they decided to follow it and developed it into something ludicrous, but by the time it became ludicrous, they had already invested too much money into it.

That or they had too many "friends" tell them their idea was the next best thing since sliced bread instead of something telling them it actually sucks donkey schlongs.

If you're going to take a risk by investing time and money into a new idea, please test it ASAP.

Make one and sell it to a stranger. Not a friend.

When I see the sad stories on Shark Tank or Dragons Den about people putting everything on the line to pursue a stupid idea - I just have to think these guys never stopped and tested their product in the market.

Accountant here. Revenue can be anything like - interest, royalty, sales, etc. income, is what you get when you net your revenues with your expenses. VERY high level, but it served it's general purpose.

I could tell pretty quick this was fake, without even looking at the user's post history. Most small companies do not turn a profit within the first few years of operating. The average for most businesses is 3 to 5 years. For this guy to be turning a profit or even breaking even within 6 months would be amazing. I don't know the statistic off the top of my head, but the percentage of new companies that are still around after 5 years if phenomenally low.

Second, "cover this month's bills entirely from income" didn't quite sit well with me. What bills? Your electricity and rent bills? What about wages? Or other non-billed expenses?

The word "income" doesn't also make sense here. If I weren't in business, and I was just talking about my personal income, I would call what I make "income." But income means something different in businesses. What a person calls their income, a business would call revenue. Income is what you have after paying to get your revenue (i.e. revenue - costs). If this guy hasn't been turning a profit, it doesn't make sense to say he's using income to pay bills, because income is what you have after paying bills. He's using revenues to pay bills.

But that's a moot point, because OP obviously doesn't own a small business. His post is vague because there's really nothing to talk about.

Congrats man. There is nothing better than pouring your blood, sweat, and tears into something and watch it become a success. Haters and naysayers be damned. Go out and get yours.

I recently partnered with a guy to open a E-cig store and we were really down the first three months... hemorrhaging money but I stayed in and kept the faith. July alone made up for all the previous losses. August was even better.

sounds interesting. i have a few questions if you dont mind answering?

do you need an import license for stuff like that, or were the e-cigs domestically made? and was it a e-business [website based]

how much starting capital [feel free to be vague] is required for a business like that? i guess one would have to buy a ton wholesale [like a shipping containers worth] to benefit from the economies of scale

Good stuff. It's a good way to start. A lot of the people below don't get it that when you start a business, you really put business on one side and your normal life/assets on another. You have to live in the middle, control both incomes, and lives. Having broken even after 6 months is a good sign so keep it up. I JUST started my own business as well on Aug 1...setting is up is loot! But hopefully, that revenue curve begins to build. Congrats again and hopefully you won't have a 9-5 in the future bro!

I ran my own business for two and a half years before closing it down, I know that feeling. The one piece of advice I'd give to you is, put away money for taxes! Taxes were the bane of my existence when I was operating.

Fair enough. So why do you invest? Don't kill OP's dreams without telling him the upside. You wouldn't invest in small business unless you believed in it. Small biz can kill it and you know it. I see it every day.

This is where I'm looking to be. I'm sick of being a software engineer after 20 years in the field. I want to do something for myself and my kids. But I'm scared and nervous about failing which cripples me and I do nothing.

As someone who worries himself to sleep some nights about my inability to help my dad and his small business, congratulations. That is an awesome achievement and I hope you show your employees the praise they deserve for what they accomplished under your direction. :-)

Ha! I feel you man. I'm thinking about hiring some new blood for the office. These things that seem small to an outsider are sometimes the biggest things to people trying to do it on their own. Congratulations!

Small business owners reunite!!!!! Props! I just went full time as a photographer with my own at home business last month. Times are tough right now and money is tight but I love what I do, and being my own boss so money doesn't matter as much.

Congratulations dude! As someone who has been running his own small business for 2 years now - I know the feeling!

It's the hardest thing you're ever going to do, and you will want to give up! Don't!

From speaking to some of my clients (Large national companies), the owners all wanted to give up, too much debt, people not paying, stress, long hours etc etc, but if you ask them if they would choose differently - they all say no.

Hang in there, this is the most exciting and rewarding trip of your life!

Wait till you get your tax bill, either sales tax, payroll, or your big one after your first year. That part really sucks, you think you have some extra cash and then you owe more than you have. The joys of small business.

Congrats! I am a Vet who started a business right after getting out. It took me months to make even enough to cover my mortage. I know how hard it can be. I admire you and your persistence. Please reach out on LinkedIn to the Veteran CEOs and give us some pointers!